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Ingevity to Gain From Capa Buyout & Regulation-driven Demand
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We issued an updated research report on Ingevity Corporation (NGVT - Free Report) on Apr 7.
Ingevity is benefiting from the acquisition of the Capa caprolactone business. The acquisition contributed to growth of the company’s revenues and earnings in 2019. The buyout also enabled Ingevity with a new technology platform to drive revenue and earnings growth. The addition of the engineered polymers product line through the acquisition is driving sales in the company’s Performance Chemicals division. Ingevity expects the acquired business to deliver strong growth in 2020.
The company is also seeing strong momentum in its Performance Materials division as reflected by a roughly 22% increase in sales and 26% growth in segmental EBITDA in 2019. It is benefiting from strong demand for technologies (including honeycomb) designed to meet U.S. EPA and California Tier 3 LEV III regulations. Stricter regulations for automotive gasoline vapor emissions in North America should continue to drive sales of Ingevity’s solutions in the automotive industry. The company remains focused on offering innovative solutions to meet regulatory requirements.
Ingevity is also poised to gain from the country-wide adoption of China’s new gasoline emissions standards, the China 6 national standard. The company should benefit from the expected activated carbon demand growth based on the anticipated full transition by automakers in the country to the China 6 standard by mid-year 2020.
Moreover, Ingevity is seeing strong growth in pavement technologies on strength in North America. It expects mid-single-digit growth in 2020, driven by growth in North America, adoption of Evotherm warm-mix technology and global expansion.
However, the company is seeing weakness in industrial applications. In the last reported quarter, its Performance Chemicals unit was affected by a slowdown in industrial activities. Soft market conditions, particularly in Europe and Asia, affected the segment in the quarter. The company witnessed a roughly 19% decline in sales related to industrial specialties applications in the quarter, hurt by weaker demand for printing inks. It is witnessing continued pressure in industrial specialties in 2020.
Ingevity is also exposed to cost pressures. The company saw higher legal expenses in 2019 in the Performance Materials unit related to intellectual property. It also sees legal costs to remain high in 2020. Moreover, Ingevity expects headwind associated with raw material cost inflation in its Performance Chemicals unit in 2020.
The company also faces challenges from lower sales to oilfield customers. Sales to oilfield customers declined around 18% year over year in the last reported quarter. Sales also dipped around 3% for 2019. Ingevity sees continued weakness in oilfield applications in 2020 and expects mid- to high-single-digit decline this year.
Ingevity currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space are DRDGOLD Limited (DRD - Free Report) , Franco-Nevada Corporation (FNV - Free Report) and Barrick Gold Corporation (GOLD - Free Report) .
DRDGOLD has a projected earnings growth rate of 562.5% for 2020. The company’s shares have surged 238.7% in a year. It currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Franco-Nevada has a projected earnings growth rate of 19.8% for 2020. It currently carries a Zacks Rank #2 (Buy). The company’s shares have rallied 43.9% in a year.
Barrick Gold currently has a Zacks Rank #2 and a projected earnings growth rate of 41.2% for 2020. The company’s shares have gained 48.1% in a year.
Free: Zacks’ Single Best Stock Set to Double
Today you are invited to download our latest Special Report that reveals 5 stocks with the most potential to gain +100% or more in 2020. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.
This pioneering tech ticker had soared to all-time highs and then subsided to a price that is irresistible. Now a pending acquisition could super-charge the company’s drive past competitors in the development of true Artificial Intelligence. The earlier you get in to this stock, the greater your potential gain.
Image: Bigstock
Ingevity to Gain From Capa Buyout & Regulation-driven Demand
We issued an updated research report on Ingevity Corporation (NGVT - Free Report) on Apr 7.
Ingevity is benefiting from the acquisition of the Capa caprolactone business. The acquisition contributed to growth of the company’s revenues and earnings in 2019. The buyout also enabled Ingevity with a new technology platform to drive revenue and earnings growth. The addition of the engineered polymers product line through the acquisition is driving sales in the company’s Performance Chemicals division. Ingevity expects the acquired business to deliver strong growth in 2020.
The company is also seeing strong momentum in its Performance Materials division as reflected by a roughly 22% increase in sales and 26% growth in segmental EBITDA in 2019. It is benefiting from strong demand for technologies (including honeycomb) designed to meet U.S. EPA and California Tier 3 LEV III regulations. Stricter regulations for automotive gasoline vapor emissions in North America should continue to drive sales of Ingevity’s solutions in the automotive industry. The company remains focused on offering innovative solutions to meet regulatory requirements.
Ingevity is also poised to gain from the country-wide adoption of China’s new gasoline emissions standards, the China 6 national standard. The company should benefit from the expected activated carbon demand growth based on the anticipated full transition by automakers in the country to the China 6 standard by mid-year 2020.
Moreover, Ingevity is seeing strong growth in pavement technologies on strength in North America. It expects mid-single-digit growth in 2020, driven by growth in North America, adoption of Evotherm warm-mix technology and global expansion.
However, the company is seeing weakness in industrial applications. In the last reported quarter, its Performance Chemicals unit was affected by a slowdown in industrial activities. Soft market conditions, particularly in Europe and Asia, affected the segment in the quarter. The company witnessed a roughly 19% decline in sales related to industrial specialties applications in the quarter, hurt by weaker demand for printing inks. It is witnessing continued pressure in industrial specialties in 2020.
Ingevity is also exposed to cost pressures. The company saw higher legal expenses in 2019 in the Performance Materials unit related to intellectual property. It also sees legal costs to remain high in 2020. Moreover, Ingevity expects headwind associated with raw material cost inflation in its Performance Chemicals unit in 2020.
The company also faces challenges from lower sales to oilfield customers. Sales to oilfield customers declined around 18% year over year in the last reported quarter. Sales also dipped around 3% for 2019. Ingevity sees continued weakness in oilfield applications in 2020 and expects mid- to high-single-digit decline this year.
Ingevity Corporation Price and Consensus
Ingevity Corporation price-consensus-chart | Ingevity Corporation Quote
Zacks Rank & Stocks to Consider
Ingevity currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space are DRDGOLD Limited (DRD - Free Report) , Franco-Nevada Corporation (FNV - Free Report) and Barrick Gold Corporation (GOLD - Free Report) .
DRDGOLD has a projected earnings growth rate of 562.5% for 2020. The company’s shares have surged 238.7% in a year. It currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Franco-Nevada has a projected earnings growth rate of 19.8% for 2020. It currently carries a Zacks Rank #2 (Buy). The company’s shares have rallied 43.9% in a year.
Barrick Gold currently has a Zacks Rank #2 and a projected earnings growth rate of 41.2% for 2020. The company’s shares have gained 48.1% in a year.
Free: Zacks’ Single Best Stock Set to Double
Today you are invited to download our latest Special Report that reveals 5 stocks with the most potential to gain +100% or more in 2020. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.
This pioneering tech ticker had soared to all-time highs and then subsided to a price that is irresistible. Now a pending acquisition could super-charge the company’s drive past competitors in the development of true Artificial Intelligence. The earlier you get in to this stock, the greater your potential gain.
See 5 Stocks Set to Double>>